I fly at least 4 - 5 times a year from Calgary to Ontario (Windsor). There are direct flights between YYC - YQG, (or YXU, or YYZ... 2nd & 3rd choice respectively).... Anyway, lately I found out, that Air Canada has cheaper flights to Windsor than Westjet. (Ofcourse connecting in YYZ then hop on a Dash 8 to YQG)...

I was looking at flights from YQX-YEG for my wife's uncle a couple of weeks ago, and Westjets price was almost $200 more than AC's.
Also, he had to wait 4 or 5 days before he could fly out of YQX on WJ where as with AC, we have a number of daily flights out of YQX that connect in YYT.
The routing on WJ would also mean that to get to YEG, he would be connecting numberous times and it would take about 6 extra hours to get to YEG than if he flew AC.
He actually ended up driving there!

AC_B777

In life, some days you are the bug..... some days you are the windshield!

It's a very common tactic that major established carriers use to try to drive out any competition, especially low cost carriers.

This is basically what AC's been resorting to in order to both stay alive as a carrier and try to beat the crap out of WestJet, both which are not working very well right now!

However, WestJet's fares can be cheaper if you look well enough - and book well enough ahead of time. The same goes for multi-city flights, as I've noticed before while having booked last year on YEG-YYC-YVR-YEG, with a day's stay in YYC.

I may have agreed with you until I tried to book a flight last night YYZ to YVR, and of Air Canada, Skyservice, Harmony, Jetsgo, and West Jet, West Jet was the highest of all of them. I highly doubt that the other four are all predatory on West Jet.

In the past also, WestJet has not been too competitive with prices. I truly think that WestJet should have stayed West where they were successful and very competitive. There expansion is costing to much and is being represented in their fares.

I don't doubt it's not only predatory pricing, WS does have lesser competition on certain routes. I should've said that, but you guys already did, and I appreciate that anyways. But I know there is predatory pricing going on, and once again, that is not the only reason WS's prices are higher. It's very likely that due to AC's impending liquidation, increased passenger demand for WS will increase - and so will the fares.

Let me tell you something. About a month ago, I booked YEG-YVR return on WS, too. This is the flight I'm leaving on tonight, BTW. Which had the cheaper flights to YVR? NotWS, that's for sure. Why did I still choose WS anyways? Look at AC's growing problems and that's why. Not to mention that I'm a little sick and tired of dealing with AC's inconsistent service (aka Zip on that city-pair) for the time being, anyways.

Goes to show what fools the "legacy" airlines of Canada and the U.S. be. AC can resort to all the predatory (or competitive if you prefer) pricing they wish. The only thing they will accomplish by so doing is to further depress already unsustainably low yields. What they don't seem to get in their egomaniacal retaliation attempt against West Jet is that the only airline AC will hurt is themselves. Sure, AC will "pack 'em in" with their retaliatory fares but they will continue to bleed red ink in the process and further lower expectations as to what pax should pay to fly. And, if the situation is the same "north of the border" as it is in the U.S., the "legacy/would-be cartel" airlines are slowly but surely running out of markets where they can gouge pax to cover the losses of their futile fare follies aimed squarely at the LCCs.

LCCs are priced low when comparing the walk-up, fully-refundable fares. It is quite common to find the majors beating an LCC in the advance purchase market, but when you have to fly tomorrow the LCCs will (almost) always beat the majors.

Those who fail to learn history are doomed to repeat it in summer school.

There expansion is costing to much and is being represented in their fares.

Makes sense when you think about it. It's not just the expansion costs such as paying more landing fees, more employees, etc. But also fitting the 73Gs with new winglets and LiveTV. And need we mention WS's order for dozens of 73Gs, plus 5 738s? I don't know how much it costs for WS to have newwinlgets installed or to get LiveTV, but it must be a fair bit. A new 73G can cost something like $35-45 million each (not sure of the exact cost though), so that's well over a billion dollars. And that's just for the new planes.

So if AC's prices are predatory, then what do you call the bulls*#t that WS did to AC by accessing the private AC employee website to get their hands on confidential information that they are not welcome to? I guess that's not predatory? How about the information WS was given by the YYC airport authority president? I guess that's all fair game.
I always thought the point of competition was to be able to at least meet the price of your competitor if not beat it.
If Walmart has a TV for sale, and Futureshop has the same TV for less, is Futureshop guilty of predatory pricing? They are able to meet that price and then even beat it. Then why can't AC meet or beat some of WS prices?
Like BOAC707 said almost every other airline in Canada has at some point had lower prices than WS, so how come they don't get charged with predatory pricing? I think you are just trying to use the same old excuses against AC.

Briboy, what do you mean that "NL service is something different...?"

In life, some days you are the bug..... some days you are the windshield!

I'm heading to Toronto in June, and was planning on booking my fare a couple of days ago. But unfortuntly alot has came up, and I was unable to book at $129.98 oneway, so it would be about $350.00 round trip. Today I log on to book my flight, and I see that fares are now sitting between $200, and $242 one way. I'm a student, and am on a tight budget. What really ticks me off is that fact that if I travel with a partner, the fare is then only $149.98 each way per person.

Samurai_777, you made an allegation earlier on this thread that Air Canada was engaging in "predatory pricing". I have asked whether you based your analysis of this upon the "incremental cost" test or the "avoidable cost" test?

"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada

If Walmart has a TV for sale, and Futureshop has the same TV for less, is Futureshop guilty of predatory pricing?

It depends on whether Future Shop sold said TV at a loss or not. Future Shop tends to make a profit, so I'm guessing they don't commonly sell things below their overhead costs.

Air Canada has been guilty of selling seats below their costs in order to drive out competition - and their billion-dollar losses are testament to a flawed outlook toward the industry and how to act when it comes to pricing and competition.

As for WestJet selling seats below cost.... well, they almost certainly do on some routes. But they certainly don't make a habit of it - after all, they've been profitable for, what, 29 quarters now?

So if AC's prices are predatory, then what do you call the bulls*#t that WS did to AC by accessing the private AC employee website to get their hands on confidential information that they are not welcome to? I guess that's not predatory? How about the information WS was given by the YYC airport authority president? I guess that's all fair game.

No, that's not predatory. It's corporate espionage, and as long as they broke no laws while getting the info, they've done nothing wrong. AC better learn to protect itself better.

If Walmart has a TV for sale, and Futureshop has the same TV for less, is Futureshop guilty of predatory pricing? They are able to meet that price and then even beat it. Then why can't AC meet or beat some of WS prices?

If futureshop sells thousands of them and their other products at prices they know they can't make money at in an effort to drive Wal-Mart out of the market, then yes, it is predatory pricing.

It depends on whether Future Shop sold said TV at a loss or not. Future Shop tends to make a profit, so I'm guessing they don't commonly sell things below their overhead costs.

It depends on more than that. Future Shop would have to be working to drive Wal-Mart out, in other words, selling every competing product at a loss consistently in order to make the market un-attractive to Wal-Mart. In addition, Wal-Mart would have to show that the change in resource distribution by Future Shop adversely affects the company's overall business model, not just in this particular market.

There's a lot that goes into it.

Air Canada has been guilty of selling seats below their costs in order to drive out competition - and their billion-dollar losses are testament to a flawed outlook toward the industry and how to act when it comes to pricing and competition.

As for WestJet selling seats below cost.... well, they almost certainly do on some routes. But they certainly don't make a habit of it - after all, they've been profitable for, what, 29 quarters now?

Well, I don't know if it's selling seats below cost at AC, or if it's bad utilization of resources, as we see so often at USA carriers.

And let's face it: No airline makes money when they sell seats at $29 each way these days, no matter what the route (okay, okay, there are probably *some* exceptions!). It's the reduced- and no-restrictions fares that make money for the airlines.

Those who fail to learn history are doomed to repeat it in summer school.

"No, that's not predatory. It's corporate espionage, and as long as they broke no laws while getting the info, they've done nothing wrong. AC better learn to protect itself better"
AC should learn to protect itself better? It's a private AIR CANADA EMPLOYEE website that is supposed to be accessed by AIR CANADA employees only! NOT Westjet or any of their executives or employees.
Westjet should never have gone into it or even asked the former AC employee to give his AC employee number and PIN.
I would say laws have been broken and if the courts find WS guilty of breaking laws, there is going to be trouble at headquarters.

In life, some days you are the bug..... some days you are the windshield!

I'll give you guys two simple reasons for "higher" prices on Westjet flights:

1. Loads. As the load goes up, so do the fares. With the uncertainty over Air Canada our ticket sales for the summer have been phenominal. Loads across the board are way up over the "normal" booking trends that we've seen in the past few years.
2. Sustainable pricing. With the competition landscape the way it has been in the past year/year and a half, seat sales have been constant. If I'm not mistaken, we sold 56% of our tickets at a discounted price last quarter. That is simply not sustainable in the long-term. Both AC and WJ have raised fares to levels which we probably saw back in 2002 and early 2003.

Fuel is at an all time high and Nav Can isn't doing anybody favours by raising their fees. The travelling public has been very lucky in the past few years with all these cheap seats, but we knew it wasn't forever. I understand that we all want cheap seats, I don't blame anybody for being angry at higher fares. If you think Westjet charges 'too much' or higher than Air Canada, let me ask you this: what were the prices on those routes 5, 10, 15 years ago? I'll bet you the answer is a LOT higher than they are now.

Good points Brandon, the low fares that people are becoming accustomed to seeing as specials are not sustainable. The past couple of years have seen a few industries fighting for business by dramatically reducing prices, or offering incredible incentives. This has been done to increase revenue because otherwise it might be lacking for many companies. And you are right, air fares are lower now than they have been for many many years. We are spoiled right now, and it can't last forever, simply because airlines cannot last forever by providing such cheap fares.

"it's kind of like an Airbus, it's an engineering marvel, but there's no sense of passion" -- J. Clarkson re: Coxster

I'm guessing he chose the Tango fare and there is no way that those fares aren't predatory. I often fly Westjet when booking with my own money even if AC is like 10 more but if I am travelling this summer I can't say I won't fly on a tango seat even if I know it isn't fair game.

LOL! I'm sorry, but you're kind of asking me to go way over my head regarding "incremental" and "avoidable costs". I am not an expert on economics or marketing - and nor should you expect me or anybody else. So, I do not make such analyses in these terms.

you're kind of asking me to go way over my head regarding "incremental" and "avoidable costs". I am not an expert on economics or marketing

So let me get this straight. You ARE able to throw out serious allegations about Air Canada engaging in "predatory pricing", but you ARE NOT able to explain how you reached that conclusion. Hmm.... I guess that shows us how much your opinion is worth.

"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada

So let me get this straight. You ARE able to throw out serious allegations about Air Canada engaging in "predatory pricing", but you ARE NOT able to explain how you reached that conclusion. Hmm.... I guess that shows us how much your opinion is worth.

Let ME get this straight. I didn't say there is definite predatory pricing going on. I meant to say that there is probable predatory pricing going on. Clear?

I've seen a few competitors, not just WS get driven out. Smaller markets are especially prone to this. One case in point was HawkAir, the YVR-based third-tier carrier. Last year, it had to axe service to Smithers, a town of OVER 5,000 in northern BC. I know AC Jazz also serves that place, too. And WestJet? Thompson, MB, Sudbury and Sault Ste. Maries lost the WS service. As for Thompson, it was most likely the small market, as this city has only about 14,000 people. As for those two cities in ON, something tells me some interesting things were probably going on. AC Jazz must've undercut WS's fares by quite a bit to quickly keep too many customers from flocking to WS. I'd bet thet after WS pulled out, AC Jazz jacked its fares back up again because of the new lack of competition! That's only one way to drive out a competitor. There are other ways, of course.

Now, let me deal with INCREMENTAL and AVOIDABLE costs here. It can be argued both cost tests can be used, IMO. For incremental costs, this generally means costs that cannot be avoided even if you are adding the investment. An example is AC adding capacity on routes where it competes with WestJet on. Say, YYZ-YHZ. (BTW, this is where WestJet was trying to make a case of when it came to alleged abusive competitive practices by AC) All AC has to do is find a few A320, A321s, and even more 767s and start using using them to add seats on flights to and from YHZ. The result is that along with lower prices set by AC to entice customers awat from WS, WS's loads begin to suffer. In short, AC's flooded the YYZ-YHZ market with capacity. Easily so, since WS has only 737s - and not all that many planes compared to AC's mainline fleet, either. I do know that there's a break-even point in load factors for any airline in order to make a route as profitable as possible, but I don't know what it really is for WS. I'm sure they don't give that kind of info out to the public for competitive reasons. The end result is that WS ends up losing more $$ than it believes it should. So does AC, but it used that strategy to try to weaken WS's financial reserves to the point of pulling out of YYZ-YHZ at least. This explains why I have seen quite a few A321s and 767-200 and even-300s on the YYZ-YHZ route in addition to the increased frequency on AC's part, according to AC's timetable.

However.....avoidable costs are different. Avoidable costs are costs that could be avoided if the additional investment has not been made, like non-overhead costs, for example. In other words, cutting costs by getting rid of non-overhead costs, like service frills, for instance. Once again, let's have a look at YYZ-YHZ. AC is the full-service airline, while WS is not. (today, that distinction is slowly blurring between these two) AC begins to cut frills and lowers prices as a result. But the resulting fares go even lower - lower than what WestJet can handle, since it is a low-cost carrier unlike AC. Once again, WestJet's loads - and profits - are shrinking faster than the Incredible Shrinking Man.

WS claims this is unfair, not only because the lower fares are way below what it can take back. AC would be better able to do this simply because it's taking in a larger revenue, being a much larger airline. How? By jacking prices back up on YYZ-YHZ of course. With AC's cost structure being so high compared to WestJet's, AC has to be able to recoup its losses faster than WS's. That's a major reason prices will go back up once the competitor has been driven out, maybe even higher than before the competitor came in. This is where the public interest comes in, for losing a competitor means not only losing an alternative to AC, but also taking a bigger bite out of your wallet. But also do not forget that AC, being a much larger carrier and having international routes, can subsidize its own money-losing routes better than WS can.

It's interesting to note that the Competition Bureau in Canada has been using the idea of avoidable costs much more often than incremental costs in order to determine predatory pricing within the Canadian airline industry. As a matter of fact, this is probably more accurate in determining price predation, since it has to reflect the massive changes that the airline industry has gone through, particularly here in Canada. And of course, the changes that AC has gone through. AC has been accused of selling seats below cost as a measure to drive WS out of certain markets.

Now, how much is THIS opinion of mine worth now!? I may not be an expert on such matters, but it's amazing how fast you can learn when you have to. Cool, huh? There's a LOT more to costs than the above two kinds of tests to take into account, of course, but I won't go into that further.

Thank you for the wonderful explanation as to what predatory pricing is about.

That still does not answer the question I asked, namely whether you have found Air Canada's so called "probable predatory pricing" on the YYC-YQG route to be such using the "incremental costs" test, the "avoidable costs" test or the "pulled it out of my rear end" test.

I'm not arguing your conclusion. I am simply questioning the methodology you used to reach it.

"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada

Samurai, thank you for yet another response that dodges the question. I am not asking which of the tests you favored. To be quite honest, I really don't care about that.

What I am asking you is which of the tests DID YOU ACTUALLY APPLY in order to reach the conclusion that Air Canada was engaging in "probable predatory pricing".

The absence of any answer from you on this issue, as well as the lack of any data to support your conclusions leads me to believe that you have not applied any of these tests to Air Canada's pricing prior to levelling these serious allegations. In short, you appear to have engaged in libel against Air Canada for no purpose other than to score cheap points on an internet forum.

Congratulations.

"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada

The absence of any answer from you on this issue, as well as the lack of any data to support your conclusions leads me to believe that you have not applied any of these tests to Air Canada's pricing prior to levelling these serious allegations. In short, you appear to have engaged in libel against Air Canada for no purpose other than to score cheap points on an internet forum.

Hello Kettle, I'd like you to meet pot. Your attempt to demand follwo up to questions is laughable at best when you have avoided explanations of some of your points in the past. Get off your pompous high horse.

The competition bureau reached the conclusion that AC was engaged in predatory pricing practices agains C3 right before C3 went Tango Uniform. It is no big secret.

Your attempt to demand follow up to questions is laughable at best when you have avoided explanations of some of your points in the past. Give it a rest.

The only reason the cease and decist order was not signed was because as we all know C3 went TU.

Thats pure speculation. Maybe the order was not signed because Konrad von F. suddenly realized that perhaps Air Canada had not been guilty of predatory pricing. As I said, we'll never know for sure. Innocent until proven guilty.

Furthermore, the discussion in question specifically deals with the YYC-YQG route which, correct me if I'm wrong, was never operated by Canada 3000. Not quite sure what your point is.

"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada

Well it is not speculation...the board released their findings. You may chose to believe that it was not real because it did not get implemented before C3 collapsed but the fact is they found AC practices predatory.

The board can release their findings, but they do not have standing until and unless an order is issued by the Commissioner. No such order was issued. Hence, the findings do not constitute proof of anything.

Air Canada also released their findings, which concluded that there wasn't any predatory pricing. That report has just has much standing under the law as any other set of unofficial findings.

"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada

The absence of any answer from you on this issue, as well as the lack of any data to support your conclusions leads me to believe that you have not applied any of these tests to Air Canada's pricing prior to levelling these serious allegations. In short, you appear to have engaged in libel against Air Canada for no purpose other than to score cheap points on an internet forum.

Congratulations.

No. Congratulations on beating a dead horse AND trying to flame me at the same time.

Jeee-zus, I cannot believe this! That last attack on me was so laughable that I almost couldn't stifle my laughter! Yes, it was actually that funny.

I'm going with Chock head on this one. I'm outta here as far as this thread is concerned.